A month ago, the Shippers Conditions Index (SCI) from freight transportation consultancy FTR indicated that shippers might be traveling on a rocky road in the coming months. And one month later it appears those concerns appear to have been confirmed.
FTR describes the SCI as an indicator that sums up all market influences that affect shippers, with a reading above zero being favorable and a reading below zero being unfavorable and a “less-than-ideal environment for shippers.”
For March, the most recent month for which data is available, the SCI fell from -1.0 to -4.9, with FTR noting that the index is expected to continue falling into negative territory as the bump from soft market conditions caused by what it called “temporary cessation of regulatory drag” and fuel cost reductions are dimming, and save for a recession, it explained that the SCI is expected to remain in a high negative single digit reading for the remainder of 2015.
“All current indicators point towards the timely implementation of ‘big ticket’ truck regulations in the near future, including Electronic Logging Devices, Speed Limiters for heavy trucks, and the National Drug and Alcohol Database,” said FTR Senior Consultant Larry Gross in the report. “These among other regulations will have a profound effect on available truck capacity creating a shortage. The near-term crisis may be postponed if the economy slows significantly, however, something we are now watching for very closely given multiple warning signs in the economy.”
Even though the regulatory cloud surrounding future capacity conditions continues to get darker, there is a general consensus that things are better on that front than compared to a year ago while still being fairly tight.
A year ago at this time, truckload capacity was viewed by most people as the tightest it has ever been, or something close to that anyhow. There was an incredibly difficult winter to contend with, which was the case again this year, and the driver shortage was rearing its ugly head, too, much like it still is now.
That said, there are some key common themes there, coupled with the myriad industry regulations dinting available capacity, too.
Even with an improving economy and truck equipment orders seeing some traction, the overall truckload capacity outlook, according to Eric Starks, president of freight transportation forecasting firm FTR, is that things remain fairly tight, even though they have eased back some since late 2014.
“Some of that is artificial only because of the rollback of the hours-of-service (HOS) restart regulations, which essentially took some of the bite out. But it is still pretty tight, given the driver shortage still a problem, too. And there are also some indicators out there suggesting the economy has hit a soft patch, but when you look at the freight market and capacity, you don’t necessarily see those things. You see some of it but not to the level that you would expect, given what is happening in the broader economy.”